The 2024/25 outlook for the Asia Pacific hotel sector is one of contrasts, with hoteliers divided on prospects for the coming year. According to the latest JLL Hotel Operators’ Sentiment Survey, the landscape for hospitality across the region will be marked by divergent trends, with optimism soaring in certain quarters while others brace for more subdued outcomes.

Optimism in Asia, Caution in Australasia

The survey, encompassing 1,075 responses from hoteliers across the Asia Pacific, including 225 from Australia, New Zealand, and the Pacific, underscores the mixed sentiments prevailing in the industry. While North, South, and Southeast Asian hoteliers are forecasting a robust performance for 2024/25, Australasia regions display a more cautious stance.

Ross Beardsell, Executive Vice President of JLL Hotels & Hospitality Group, noted, “The pace of new hotel openings in Australia has slowed, except for Brisbane, which is poised to add 1,000 new premium rooms at Queen’s Wharf. However, the anticipated resurgence in demand remains elusive, reflecting the cautious sentiment among Australian hoteliers.”

Occupancy Trends: A Tale of Two Regions

Occupancy rates tell a story of stark contrasts. Hoteliers in Australasia and Greater China expect a more positive year in 2025 than 2024, yet their outlook remains more conservative than other subregions. A significant 35% of Australian respondents anticipate challenging conditions for the remainder of 2024, but optimism grows for 2025, with 68% predicting improved occupancy rates and only 12% expecting declines.

In contrast, Asia’s luxury and budget sectors are brimming with confidence. A remarkable 79% of luxury hoteliers and 82% of budget hoteliers in the region express positive sentiment regarding occupancy for the upcoming years. On the other hand, the midscale and upscale markets are less bullish, though upscale hoteliers remain optimistic about Average Daily Rate (ADR) growth.

Revenue and Profit Projections: Asia Outshines Australasia

Revenue and profit projections further highlight the regional disparities. Hoteliers in Japan, Thailand, and India are the most optimistic about revenue and profit growth in 2024/25, driven by strong domestic and international demand. However, the outlook in Australia and Southeast Asia is more subdued, with slower growth anticipated. In China, the sentiment is even more concerning, with a general decline in revenue and profit expected.

Joseph Sim, Senior Associate at JLL Hotels & Hospitality, expressed concerns about the broader impact of the negative sentiment from Chinese hoteliers. “The economic situation in China is causing a significant reduction in travel, both domestically and internationally, which is reflected in the continued shortfall in Chinese outbound travel to countries such as Australia.”

F&B Operations: A Sector Under Pressure

The survey also reveals growing concerns about the region’s Food & Beverage (F&B) operations. Increased input costs and budget pressures lead hoteliers to adopt a cautious outlook. Overall, 28% of respondents are pessimistic about F&B revenue growth in 2024/25, while 48% believe F&B profit will increase. In Australia, 28% of hoteliers forecast a potential decline in F&B revenues, with 32% anticipating a fall in profits. Chinese hoteliers are even more pessimistic, with 69% expecting reduced F&B activity.

Human Resources: A Critical Challenge

The human resources landscape presents another challenge for the Asia Pacific hotel sector. The survey highlights that 87% of hotels expect higher wage costs, with staff retention issues exacerbated by competitive salaries within and outside the industry. This pressure is particularly pronounced in regions where labour markets are tight, leading to a higher risk of staff poaching.

Capital Expenditure: Technology Takes the Lead

On the capital expenditure (Capex) front, technology, mechanical, electrical, and plant items top the list for 2024/25, with sustainability ranking third. However, the survey indicates that the drive for sustainability is more about meeting brand standards than responding to guest demands. A significant barrier to achieving environmental goals is the lack of funding for sustainability initiatives.

Economic and Political Uncertainty Looms Large

The broader economic and political environment continues to shadow the industry’s outlook. While inflationary pressures are easing globally, they remain a concern in Australia, where the Reserve Bank has refrained from further rate hikes despite persistently high prices. Meanwhile, New Zealand’s recent rate cut, nearly a year ahead of its projections, has set a contrasting tone.

“The global situation remains very uncertain, which has led major hotel chains like Marriott, Wyndham, and Hilton to revise their outlooks downward for the second half of 2024. IHG, however, remains cautiously optimistic, with the exception of China travel,” added Joseph Sim.

Looking Ahead: Key Markets to Watch

As the region looks ahead to 2025, specific markets are emerging as potential bright spots. India’s outbound market, in particular, is expected to play a pivotal role in driving growth across the Asia Pacific. With international travel still recovering in many destinations, the ability of these markets to capitalize on pent-up demand will be critical.

In conclusion, the 2024/25 outlook for the Asia Pacific hotel sector is a tale of contrasts, with varying optimism and caution across different regions and market segments. As hoteliers navigate this complex landscape, their ability to adapt to evolving market dynamics and economic conditions will determine their success in the year ahead.

 

 

 

Written by: Michelle Warner

 

 

 

 

 

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